Latest ‘same job, same pay’ decision holds a lesson for labour hire companies

The recent decision of Re Applications by the Mining and Energy Union re Maules Creek Coal Pty Ltd [2025] FWC 1499 (Maules Creek Coal) provides insight into how the Fair Work Commission (FWC) is approaching ‘same job, same pay’ principles under the new regulated labour hire arrangement order (RLHA Order) regime.

In making RHLA Orders to remove pay discrepancies between labour hire workers and direct employees, the FWC found that the impact of absorbing the additional costs would not lead to significant commercial impact to the labour hire company and there was little justification to retain different pay structures for employees who performed the same work.

In light of this decision, labour hire companies should ensure they review and consider how their pay structures compare to the host companies underpinning employment arrangements to determine any pay discrepancies so as to prevent being caught unprepared by a RLHA Order.

Introduction

The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 marked a significant shift in Australian industrial relations, targeting long-standing concerns around wage disparities between directly employed workers and labour hire employees.

To address this concern, the Albanese Government introduced the ‘same job, same pay’ principle through amending the Fair Work Act 2009 (Cth) (FW Act). This reform allows employees, unions, and host employers to apply to the FWC for a RLHA Order. If granted, the RLHA Order compels the labour hire employer to pay its workers at least the same as employees covered by the host employer’s enterprise agreement (EA).

There are two key exceptions where the FWC may be prevented from making a RLHA Order, one of which is where it would not be “fair and reasonable” in all the circumstances to make the order.¹

The recent FWC decision in Maules Creek Coal, delivered on 6 June 2025, is one of the first major tests of this exception.

Case overview

Background

On 11 October 2024, the Mining and Energy Union (MEU) lodged two applications for RLHA Orders, under s 306E of the FW Act. The applications targeted WorkPac Mining Pty Ltd (WorkPac) and Skilled Workforce Solutions (NSW) Pty Ltd (Skilled), both of whom supplied workers to Maules Creek Coal Pty Limited (Host Company).

The Host Company’s employees and the employees from WorkPac and Skilled, performed similar tasks. All workers attended the same pre-start meetings and received work allocations in the same manner.

Despite this, there were wage discrepancies:

1. WorkPac employees earned $17,761 less than the Host Company’s employees per year; and
2. Skilled employees earned $29,692.99 less than the Host Company’s employees per year.

It was an agreed fact that if the labour hire workers were directly employed by the Host Company, they would fall under the pay arrangements of the Host Company’s EA for the same kind of work.

Issue: Whether it was not fair and reasonable to make a RHLA Order

Both WorkPac and Skilled opposed the making of a RLHA Orders, asserting that the granting of the order would not be fair and reasonable under s 306E(2) of the FW Act. They argued that orders would disrupt and distort existing negotiated EAs, increase leave liabilities and costs, and potentially destabilise commercial operations.

Their key arguments included:

1. Increased costs: WorkPac warned that higher wage rates would lead to increased leave liabilities and operational expenses, necessitating strategic commercial shifts
2. Profitability impact: Skilled argued that the profits made under its labour hire contract would be effectively wiped out by having to pay for the increased leave entitlements to its employees.
3. Disturb existing EAs: WorkPac and Skilled both pointed to the structural differences in their respective pay arrangements to those under the Host Company’s EA. They submitted that a RLHA Order would inevitably disturb and distort the arrangements relating to the company and its employees.

Decision

While the FWC considered the submissions of both labour hire entities, the FWC held that such considerations did not weigh heavily for a finding that it would not be fair and reasonable to make a RLHA Order.

The FWC made several key findings, including:

1. Financial capacity: WorkPac was found to be profitable, and therefore capable of absorbing the increased labour costs and leave liabilities without significant commercial impact.
2. Pay structure differences: Differences in EA structures were not deemed to be sufficient justification for maintaining the pay discrepancies between the pay arrangements of the labour hire companies and the Host Company’s – especially if the employee of the two labour hire companies performed the same work as those of the Host Company’s workers.

The FWC referred to the Revised Explanatory Memorandum for the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 which outlines the rationale behind the implementation of RLHA Orders, stating at paragraph [77] that the RLHA Order intends to:

“…[r]equire labour hire employees to be paid no less than what they would receive if they were directly employed by the host business and paid in accordance with the host’s enterprise agreement or other employment instrument.”

In consideration of the intention of the new amendment, the FWC held that it would be fair and reasonable for WorkPac and Skilled employees to be paid the same rate as the Host Company’s employers for the same performance of work.

Held

The Deputy President granted the RHLA Orders to be applied to WorkPac and Skilled.

Key takeaways for labour hire companies

The Maules Creek Coal decision offers guidance on how the FWC may apply the ‘same job, same pay’ principle in practice.

1. Pay structure differences: Differences in EA structures were not deemed to be sufficient justification for maintaining the pay discrepancies between the pay arrangements of the labour hire companies and the Host Company’s – especially if the employees of the two labour hire companies performed the same work as those of the Host Company’s workers.
2. Fair and reasonable exception is narrowly interpreted: The FWC will consider various factors to determine whether the implementation of a RLHA Order will be fair and reasonable (e.g. commercial and financial impacts on labour hire companies). However, the FWC will be hesitant to find that such factors will sufficiently outweigh the unfairness of the wage discrepancies between labour hire employees and host company employees.

Practical steps for labour hire

1. Identify risk areas: Review labour hire arrangements to determine whether the employees are performing similar work to the host company’s employees
2. Compare pay structures: Conduct a gap analysis between the labour hire company’s current pay arrangements under an applicable enterprise agreement and the host company’s pay arrangements to determine any inequities.
3. Negotiate agreements: Review and negotiate contractual terms with host companies to account for any pay differences to enable the absorption of extra costs in the event that the gap analysis indicates exposure to potential RLHA Orders.
4. Develop internal assessment tools: implement frameworks to assess whether a future RLHA Order could be challenged on “fair and reasonable” grounds. This may include, comparing the rates of pay provided to the employees and the rates of pay under the host company’s instruments, and whether the rates of pay are generally consistent with market rates.

The Workplace and Safety Team at Hamilton Locke can assist with reviewing pay structures and advising on relevant approaches in relation to the impact of this decision. For more information, please contact Kiri Jervis or Roxanne Fisch.

¹FW Act s 306E(2).